<p>[News</a> & Press - Private-Equity Firms Forced to Evolve](<a href=“http://www.preqin.com/item/private-equity-firms-forced-to-evolve/102/4635]News”>Preqin | Alternative Assets Data, Solutions and Insights)</p>
<p>Good recap of state of Private Equity. Comment from pension investor revealing - we can’t put much money in until we start getting our money out.</p>
<p>[Buttonwood:</a> Rich managers, poor clients | The Economist](<a href=“Rich managers, poor clients”>Rich managers, poor clients)</p>
<p>title says it all</p>
<p>[SMC</a> continues to diversify its portfolio | Stanford Daily](<a href=“http://www.stanforddaily.com/2012/01/10/smc-continues-to-diversify-its-portfolio/]SMC”>SMC continues to diversify its portfolio)</p>
<p>Very revealing article.Author states “SMC has sought to lessen its exposure to PE & Real Estate”. Author doesn’t take time to look at SMC financials to see that PE went from 20.1% in 2010 to 23.1% of portfolio in 2011.RE 17.7% to 19.6%. I guess they are seeking but failing because they can’t get money back from PE firms.</p>
<p>Head of SMC says “still in process of getting back to the level of liquidity that we would like”. In other words–we have a liquidity problem.</p>
<p>A friend of mine works in PE and says that there is still too much money in PE…and he thinks that will continue…</p>
<p>Expected returns are much lower in PE than they used to be, but…where else can pension funds and endowments get the returns that are needed? Bonds? No. Equities? Not likely high enough.</p>
<p>I also talked to somebody today that deals with hedge funds and he said…hedge funds are hurting…people are losing their jobs. And banks…they raised salaries and cut bonuses…and now…they don’t want to cut salaries…so…layoffs…</p>
<p>The way volumes in equities bonds, commodities like gold have started out this year…well…volumes are way way down…</p>
<p>Looks like market participants have really cut back…and that includes hedge funds.</p>
<p>The big headache for endowments for the past 7 months is not getting cash fom PE exits. There are 3 primary sources of getting cash out of PE investments:</p>
<ol>
<li><p>IPO-problem here is recent big PE IPO’s have done very poorly(HCA,Freescale). When IPO investors loose money they are very reluctant to back the next PE IPO which begins to look like the funds are just trying to pass on their over-leveraged trash.</p></li>
<li><p>Dividend re-caps-this was especially big with real estate where the fund would issue extra debt and send the cash to investors. Problem here is that the people who bought this debt have been crushed so they are obviously not at all interested in buying these bonds.</p></li>
</ol>
<p>3.Sell the PE investments to someone else-most of these companies are not high growth companies that are attractive to buyers. In the end if it is sold it often is to another PE company but net-net whatever cash is received is just taken out of another PE company.</p>
<p>Question is will things get better soon because they need to-personally I don’t see it.</p>
<p>[Insight:</a> The surprising strength of Canada’s pension funds - Yahoo! News](<a href=“http://news.yahoo.com/insight-surprising-strength-canadas-pension-funds-155310735.html]Insight:”>http://news.yahoo.com/insight-surprising-strength-canadas-pension-funds-155310735.html)</p>
<p>I’m not really anti-PE, but it is a risky,illiquid asset and my problem with endowments is how much of their portfolio is in PE and hedge funds. Here,I think Harvard is taking the correct approach and lessening their dependence.</p>
<p>There are very good PE firms out there(Carlyle) and not very good ones in my opinion(TPG). I think the Canada Pension fund is taking the right approach and is largely directly investing their money rather than using PE firms and saving the ridiculous fees.</p>
<p>[The</a> Comeback Kid - Forbes.com](<a href=“http://www.forbes.com/2011/04/06/midas-list-11-jim-breyer-venture-capital-comeback-kid.html]The”>The Comeback Kid)</p>
<p>C’mon Man-Really,Really bad move by Harvard,MIT, and Princeton. Stanford stuck wih him and is looking at a huge Facebook pay-day.</p>
<p>[Yale</a> still addressing budget gap | Yale Daily News](<a href=“http://www.yaledailynews.com/news/2012/jan/19/yale-still-addressing-budget-gap/]Yale”>http://www.yaledailynews.com/news/2012/jan/19/yale-still-addressing-budget-gap/)</p>
<p>New round of cuts. Crisis is far from over.</p>
<p>It is interesting that the universities that always were frugal had a much easier time adjusting to the recession than the universities like Yale that thought little about fiscal restraint. </p>
<p>I was on a personalized tour of a new building at a university I attended for grad school. Once I realized how many millions they had spent on unnecessary fluff on a building that wasn’t even that large, I stopped giving them money. I still regularly donate to my undergrad school because they are very cost-efficient.</p>
<p>Amen, Charlie.
From the YDN article:
</p>
<p>The rationale behind building two additional residential colleges is especially suspect here since the only publicly avowed reasoning for them is so Yale can increase the size of the incoming class, which would entail the need to increase faculty, which would increase operating costs further and so-on and so-on. The whole thing smacks of one great big vanity project.</p>
<p>^^^ Not just faculty; financial aid also makes increasing class size a losing proposition. And this not just at Yale.</p>
<p>[Budget</a> projections take positive turn | Yale Daily News](<a href=“http://www.yaledailynews.com/news/2011/nov/17/budget-projections-take-positive-turn/]Budget”>http://www.yaledailynews.com/news/2011/nov/17/budget-projections-take-positive-turn/)</p>
<p>Curious that just 2 months ago Yale was singing a very different tune.</p>
<p>I don’t get it. If the so-called, “smoothing rule” alluded to in the article, merely uses the previous year’s endowment draw as the basis point, how does the rate of withdrawal ever get reduced?</p>
<p>[MOODY’S</a> AFFIRMS STANFORD UNIVERSITY’S P-1 RATING ON TAXABLE COMMERCIAL PAPER PROGRAM IN CONJUNCTION WITH AN INCREASE IN PROGRAM AUTHORIZATION TO $500 MILLION FROM $350 MILLION](<a href=“Moody's - credit ratings, research, and data for global capital markets”>Moody's - credit ratings, research, and data for global capital markets)</p>
<p>[MOODY’S</a> ASSIGNS Aa1 RATING TO DARTMOUTH COLLEGE’S (NH) $70 MILLION OF TAXABLE REVENUE BONDS, 2012 SERIES A; OUTLOOK IS STABLE](<a href=“Moody's - credit ratings, research, and data for global capital markets”>Moody's - credit ratings, research, and data for global capital markets)</p>
<p>Here comes the debt</p>
<p>[The</a> Hedge Fund Industry Has Kept 98% Of The Profits in Fees](<a href=“http://www.businessinsider.com/how-the-hedge-fund-industry-has-kept-98-of-the-profits-in-fees-2012-1]The”>The Hedge Fund Industry Has Kept 98% of the Profits in Fees)</p>
<p>This Simon Lack guy is creating few headaches for the hedge fund industry. Problem is he worked inside its seedy underbelly for many many years so its hard to refute him.</p>
<p>[News</a> & Press - Only the brave face IPO carnage](<a href=“http://www.preqin.com/item/only-the-brave-face-ipo-carnage/102/4693]News”>Preqin | Alternative Assets Data, Solutions and Insights)</p>
<p>While the PE market still stinks</p>
<p>Here’s an article I just read:</p>
<p>[How</a> Private Equity Helped Save the U.S. Economy](<a href=“How Private Equity Helped Save the U.S. Economy | The Fiscal Times”>How Private Equity Helped Save the U.S. Economy | The Fiscal Times)</p>
<p>It points out some of the positives of PE and helps me to understand a bit better what this thread is talking about.</p>
<p>[Private</a> equity under scrutiny: Bain or blessing? | The Economist](<a href=“Bain or blessing?”>Bain or blessing?)</p>
<p>Another good, fair artice on PE.</p>
<p>Sm74…</p>
<p>That is a great article…</p>